This blog is devoted to political history and opinion and its relationship to economics. I try to keep my opinions and conclusions based on logical results from data analysis. yes, even in politics there is a lot of empirical data available. In the comments, while I allow all, the only ones I find credible are those who live by the crede, 'show me your sources, and I'll show you mine" and I am not talking about biased reports from places like Fox News and MSNBC.

Tuesday, August 5, 2014

On Wealth, The Wealthy, and the Liberal Message About (It) Them

HYPERBOLE IS A TERRIBLE THING, especially when used in trying to influence people and win friends. Unfortunately, in the Liberal/Progressive campaign to shed light on the rapidly increasing problem of Wage and Capital Inequality in America, this is what the argument has turned into Simply put, by attacking the 1% en mass is quite counter-productive and frankly pissing a lot of would be supporters off; like me.

My background, fortunately, allows me to understand or to know where and how to look for an understanding of how inequality works, why it exists, why it won't go away, and how to mitigate it. I write in great detail on it at myesoteric.hubpages.com with lots of long prose, boring numbers, and statistics. Here, I will attempt to keep it short and sweet and, hopefully, much less boring.

The problem I see with the message coming from the Left since the beginning of the "Occupy Wall Street" movement is that it morphed from the illicit "methods" some of the wealthy used to acquired their wealth to the fact that they were simply wealthy; as if being wealthy was a sin in and of itself. It is easy to understand how this can happen, for it is much easier to make a physical object the focus of derision than it is an abstract idea ... like fraud or lack of ethics. But as soon as the revolution took their eye-off-the-ball and began attacking a class of people, they lost the war.

I am here to tell you that if you are a Conservative who believes in conservatism or a Liberal and believes in liberalism, then there is nothing wrong with having gobs of money and selfishly spending it on ones self, it that is what pleases you no matter how garish it might be. If you are a Socialist, well then there are probably some among you do believe that kind of behavior is wrong and should be stopped in one manner or another. But America was conceived in liberalism but reverted to conservatism for much of its history, until the Great Depression taught us there is a better way. In either case, however, our modus operandi has always been to work hard and prosper and enjoy the fruit of our labor.

Nevertheless, part and parcel of that saying is you must come by your wealth honestly; honesty-is-the-best-policy has always been assumed in America, although rarely followed. Honesty and fair play is also the grease that is supposed to guarantee all Americans, if they try hard and have the talent, to succeed in life; to make it to at least the middle class, if they start in the lower economic rungs, and to make it to the upper classes from the middle economic class. But, for the most part, economic honesty and fair play, absent coercion from government regulations, simply doesn't exist in American society, or any other society for that matter. This is why true economic mobility in most economic stratifications, save for those who lived on the frontier during the westward expansion and a short period between 1950 and 1980, was not a reality in America.

Yes, as technology advanced, so did the standard of living at all economic levels, but except for special periods like WW I, WW II, and the Great Depression, it rose at a higher rate in the higher income levels than it did at the lower ones. Why? Because the lack of economic honesty and fairness in our system allows it to happen that way. This is the simple economic reality of America, and THAT is what the Occupy Wall Street movement, or what is left of it, and its follow on should be railing against.

The target of their ire shouldn't be directed at the 1%, but instead at several sets of people who allowed many unworthy people to gain or improve upon that status. This would be:

The ones that destroyed the regulations, such as the Glass-Steagal Act which prevented mortgage banks from mixing with investment banks, which protected us from dishonest financial institutions and real estate brokers.

The regulators, such as Alan Greenspan, who refused to use what regulatory authority he had available to him to prevent the debacle which took place from happening, or at least being as bad as it was.

The rating agencies and their Principals who conspired with the financial institutions to provide false rating reports was well as any government oversight regulators which allowed this to happen

The real estate institutions, agents, brokers, and appraisers who participated and facilitated the fraud against uneducated buyers by glossing over, hiding, or flat out lying about relevant facts concerning the acquisition

The financial institutions, Principals, and employees who knowingly and willingly brokered mortgages to people without the wherewithal to repay, packaged untraceable financial packages with known toxic collateral in them, as well as the government agencies who allowed these financial instruments to exist in the first place.

In every case, laws and regulations designed to ensure honesty and fair play in our financial systems were eviscerated, the government people put in place to keep the players honest turned their backs, and the politicians who so naively believe the economic system will take care of itself if only left alone were put in charge only to be proved wrong again for about the 25th time. THAT is what the fight must be against, not the people who are simply wealthy for most of them got there by more or less honest means and should not be turned into villains just because they are part of the 1%.

If you think so, you missed the point by a mile. The point is HOW they got there, and now you are talking only about 10% of the 1% ... maybe ... who did it by really dishonest means. In the world of economic inequality, there are only two things that need our attention:

Reducing the opportunities for dishonest people to take advantage of honest people, and that is the job of government

Mitigating the natural, inexorable tendency of capitalism to transfer wealth from the poor to the rich (that is a whole other discussion. It can be done, and, if fact, has been done in the past while maintaining all of the good things about capitalism) This also the job of government.